The world-famous internet corporation, Facebook runs the social networking website. Established during the year 2004, Facebook is headquartered in California, United States. Facebook is a technology and social media company founded by Mark Zuckerberg, together with his fellow students of Harvard.
It is indeed a popular global social networking channel and one of the world’s valuable companies. Also, Facebook is considered one of the Big Five Technology companies together with Microsoft, Amazon, Apple, and Google.
Facebook provides various products and services apart from its social networking platform that includes the following:
- Facebook Watch
- Facebook Messenger
- Facebook Games
The company has also acquired WhatsApp, Instagram, and Oculus. Being the largest social networking, it has more than a billion active users. The main mission of Facebook is to get the world more connected on its platform.
The SWOT analysis of Facebook lists all the main strengths, weaknesses, opportunities, and threats that give support to the company to increase its revenue. Read out this article, to get an understanding of where Facebook stands.
The SWOT analysis of Facebook indicates the strengths of the brand in which the company is good and what distinguishes it from its competitors, its weakness that stops the company to perform well and should focus on the ways to improve.
It lists its opportunities that the company can use to increase its market share and brand value. It also throws light on the threat that has the potential to harm the company.
To make sure that Facebook meets the long-term competitive advantage it must address the various concerns highlighted in the SWOT analysis of Facebook.
Let us discuss on the SWOT analysis of Facebook.
Strengths in the SWOT Analysis of Facebook
- Strong Brand – Facebook is a strong brand and is important for steadiness and long-term sustainability. During the year 2019, Facebook was ranked the top five as the most valuable brand by Forbes. The brand has a value of about $88.9 billion and is indeed a strong brand in the social media industry across the globe. This is indeed a big strength for the company.
- Varied Portfolio – Having a varied portfolio increases the company’s stability and protects its main financial crisis in case revenue fall in one sector. Facebook evidently understands that you should not focus only on one product, while spread the company’s investment across various areas. The various portfolios of the company are:
- Oculus – virtual reality device
- Workplace – a business tool
- Portal – a video calling device
- Calibra – an electronic payment system
The company’s various portfolio is a big strength to the company.
- Dominance in Market – Those companies that dominate the market can influence their elevated positions to its advantage. The company sees billions of active uses per month. Being dominant in the social media market is a huge strength for the brand.
- Loyal Customer Base – For any brand to be successful, there must be a huge customer base. Facebook has a large and loyal customer base. The majority of the world’s population makes use of Facebook and its various products like WhatsApp, Instagram, and Messenger. This has put Facebook is a high position and is also seen as its main strength.
- Best Employer in the World – Facebook has an excellent HR policy and is considered one of the best in the social media industry and across the world. It is famous to attract and hold the top talent in the domain. The company has been ranked by Forbes in the following categories:
- Best Employer for Diversity during the year 2020
- World’s Best Employer during the year 2019
- America’s Best Employer during the year 2019.
- Strong Leadership – The perfect and a great leader with a strong vision, Mark Zuckerberg is indeed a strong strength for the company. The leaders have a strong vision with respect to the company culture, increased profitability, stability, sustainability, and innovation. The company has fewer internal disputes and has maintained its ranks as compared to other companies.
- Strong focus on Research and Development – Facebook spends a huge amount and has invested a good amount in Research and Development. This is seen in its innovative products. Having invested a huge amount in R&D and introducing many products has benefitted the company to a great extent.
- Strong Advertisement Platform – All though Facebook has been started as a social media platform, it does have a huge potential to support advertisements. It sees a huge revenue from various advertisements. Having a strong customer base, it indeed gets more users to check with the advertisements that the platform hosts.
- Efficient Marketing Strategy – Facebook uses a simple marketing strategy. As it has a huge customer base and the fact that billions of users make use of this platform daily, it is indeed a powerful tool for marketing.
- Excellent User Experience – Facebook has many users using its platform every day and has an excellent user interface that is easily moved across various pages. The users find it easy to travel through its pages thereby making a smooth stay for the users on this platform.
- Understanding’s Users Requirements – Facebook algorithm captures the user’s search behavior and understands the user’s pattern of searching. This is a strength to get connected which is the main goal of the platform.
Weaknesses in the SWOT Analysis of Facebook
- Privacy Concerns – Facebook faces reaction over its neglect over the user’s privacy protection. Due to this, the company experiences a decline in popularity in a few regions worldwide. If the company fails to address this issue on the user’s privacy concern, it would lose its popularity. Facebook has lost many users due to this concern. This is a great weak point for the brand that would limit its growth.
- Overdependent on Advertising – Facebook’s business model is dependent mostly on various advertising for their revenue. Almost 98% of its revenue comes from advertising. During the year 2019, out of its total annual revenue of about $70 billion, $69.66 billion is from its advertising. This is indeed a weak point as the main dependency is on a single platform of advertising. When there is a dip on advertising on the platform, it would be a severe loss to the company.
- Spread of Fake News – Facebook has been under many criticisms to spread fake news and much misleading information on various facts. When a user posts fake news or some wrong information it spreads to the whole world in no time. Facebook’s failure to control such spreading of fake news would harm the society to a larger extent. This needs to be controlled by the company or else it would become more in no time.
- Management Issues – Facebook has seen many scandals and has disrupted the good understandings that existed between the top-level management ever since the company has formed. The accountability requirement on the company has turned into a great weak point as the top management executives put a kind of blame game and choose to maintain a distance from major scandals like the Russia meddling scandal. This is a huge weak area for the brand as this would have a negative impact on the users.
- Website Customization – Facebook sees a great lack in the website customization. As the website has the same display for all the users and while the user’s requirement changes, the website is not customizable. This sees a weak point on the brand as the platform is being used by individual users, social media marketers, small business owners, etc.
- Weak Click Through Rate (CTR) from Advertisements – Facebook sees a weak CTR from advertisements. Most of the Facebook users are individual users who would be posting various content for their personal use or few businesses would be posting their business post. Due to this, the possibility of CTR from the advertisements is quite less as people would not prefer to check with it while they are into their search or other activity on Facebook.
Opportunities in the SWOT Analysis of Facebook
- Varied Portfolio – All though Facebook owns many other platforms like Instagram, WhatsApp, Messenger, and other platforms. Facebook’s business revenue is mainly dependent on social media and advertising. Facebook sees a lot of opportunities when it extends its portfolio beyond the social media industry.
- Expansion of Existing Platforms – Facebook has billions of users, it sees a huge opportunity on expanding its existing services like online video streaming, the marketplace, business tools, e-wallets, and so on. On doing this, Facebook would see more opportunities to grow.
- Integration to other Applications – As there is a huge advancement with technology, many applications and websites are being integrated whereby many users can connect through other platforms. Facebook sees a huge opportunity and can open its platform that would integrate with many applications like surveys, e-commerce, podcasts, blogs, contests, games, reviews, etc.
- Many Target Audience – Even though Facebook is popular, the main drivers of this platform are technology people. On introducing new features, Facebook can attract other target segments like senior citizens or high business platforms like LinkedIn.
- New Acquisitions – Facebook can gain more revenue when they expand its portfolio on acquiring many established entities. Also, it can acquire good start-ups and can expand more.
- Changes in the Advertising Trends – Many Facebook users can access their Facebook accounts through their mobile app. The company can get more opportunities when it can improve on its mobile-based advertising so that it could increase its growth.
- Increase Revenue Source – Facebook mostly depends on advertising for its income source. It should exploit other opportunities as well to get more revenue.
Threats in the SWOT Analysis of Facebook
- Competitors – Facebook sees strong competition from other social platforms. This is a threat to the brand. TikTok is a new entrant to the social media platform that provides customized platforms to target the younger generation. Because of this, Facebook’s growth reduces.
- Increased Regulations – Facebook sees many unfavorable regulations that are being passed and adopted. The recent scandal like the Cambridge Analytica would see a serious threat by the brand and would decrease its brand value.
- Data Safety – The various issues related to data safety have prompted many regulatory bodies. This has made Facebook adhere to new accountability and transparency requirements. This issue has reduced Facebook users and few of them have migrated to other platforms.
- Users use ad-block extensions – Many educated internet users provide extensions that block advertisements from the websites. Many such users are increasing and are becoming a threat to the Facebook platform.
The SWOT analysis of Facebook mentioned in this article has highlighted the main strengths of the brand that comes up from its brand value, dominant in the market, loyal customer base, receiving the best employer award, strong leadership, strong focus on R&D, and strong advertising platform.
Its weakness is seen in the privacy concerns, overdependence of advertising, the spread of fake news, and management issues. The company sees huge opportunities on increasing its portfolio, expansion of the platform, and new acquisitions.
The threats are seen in competitors, security in data, and blocking ads.